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Understanding my lawyer regarding a lien strip?

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  • Understanding my lawyer regarding a lien strip?

    We filed in July 2012. The main reason in my mind was to strip a 75,000 second mortgage. Our house appraised about 45 below our first mortgage.

    We had some objections and addressed those, being recently confirmed. Confirmed.....yea!. But we also received a letter from the trustee stating that our plan requires 3% but we are only paying 0%.

    I think this is because the our lien was not stripped and is in the plan. Plus there are some student loans listed that we pay outside the plan.

    I brought this to the attorneys attention and they told me, they like to wait before stripping the lien out. When I asked why, they said it worked better when they did that. When I mentioned the student loans they did not seem like it concerned them at all.

    When I estimate the payments applied we pay all of our secured debt and about 35 % of our unsecured debt. They lawyer says not to try to do the math as Ill drive myself crazy.

    Shouldn't this be in our confirmed plan now?

    Does this make sense or I'm I getting lied to?

    Thank You!

  • #2
    It may or may not be important, but can you clarify your date please?
    I believe that a lien strip may work the same way as other unsecured debt... in other words, you may need to pay a percentage of it in your plan. Others will be along to clarify.

    Keep On Smilin'

    Comment


    • #3
      Hi,

      We filed in July of 2011, our plan was confirmed in April of 2012 and we received the letter in the beginning of May 2012.

      Thanks!

      Comment


      • #4
        Our lawyer took care of the lien strip two days after we filed. By the time we got to our 341 meeting, it had already been entered as our creditor made no objection or showing. It doesn't actually get discharged until our BK is successfully completely. It is a separate proceeding and case even though it's related to the BK. Our second is listed in the BK as a creditor... so is our first [even though we have made all our first's payments on time and pay it outside of the plan]. We are paying 0% to unsecured creditors.

        If you are confirmed, your plan should already tell you how much you are paying to both secured and unsecured. The trustee objections should have been addressed before confirmation. I would insist on a meeting with your atty in person to have him/her explain why the trustee is raising your payment. I'm assuming you meant to say that you filed in July of 2011. When were you actually confirmed? If that is when you filed, I would really press your atty about the timing of taking care of the lien strip. It is separate but still a part of the plan from what I understand and something that should have factored into the plan from the trustee's perspective and that of the judge.
        Filed Ch 13 Feb 9, 2012, 341 meeting Mar 15, 2012, Confirmed Apr 5, 2012
        Anticipated freedom party Apr 2015

        Comment


        • #5
          The only thing you should care about as it relates to the % is. . .

          Did the Order Confirming the Plan change your Plan payment in any way? If it DID NOT who cares what is being paid and when? The % is more likely a calculation made by the Trustee based upon the Confirmed Plan and the claims on file. The student loan has nothing to do with it other than maybe something will be paid.

          The lien strip typically happens before Confirmation but there is no rule that it cannot be done after Confirmation (although an argument could be made that if the Order Confirming does not mention the issue - say reserving the right to seek the lien strip - its too late hence the reason it is better before).

          Des.

          Comment


          • #6
            My attorney told me that when you are in a 0% payback, it doesn't matter when the lien is stripped. However, if you're paying a certain percentage to unsecureds, then it can matter because the lien becomes an unsecured creditor and is entitled to that payout. If they don't do the strip right away, then it can mess up the way the proceeds are divided.

            We are in 0% payback and our lien strip was filed about a year after we filed, well after confirmation, and there were no hitches.
            Filed Chapter 13 on 2-28-10. 341 completed 4/14/10. Confirmed 5/14/10. Lien strip granted 2/2/11
            0% payback to unsecured creditors, 56 payments down, 4 to go....

            Comment


            • #7
              Just to clarify.
              We are confirmed.
              I think our plan requires that we payback 3%. We recived a letter from the trustee stating that after entering our debts in the system we would pay back 0%. I think if 75K second mortgage is removed from the plan. The plan will show that we are actully paying back 35%.

              My concern is that the lien is listed in the plan as a mortage and SECURED ARREARAGE-REFORM ACT paying back 100%? This would certainly change the numbers as our other consumer debt is tiny compaired to this.

              Thanks

              Thank You.

              Comment


              • #8
                Originally posted by wobbly View Post
                Just to clarify.
                We are confirmed.
                I think our plan requires that we payback 3%. We recived a letter from the trustee stating that after entering our debts in the system we would pay back 0%. I think if 75K second mortgage is removed from the plan. The plan will show that we are actully paying back 35%.

                My concern is that the lien is listed in the plan as a mortage and SECURED ARREARAGE-REFORM ACT paying back 100%? This would certainly change the numbers as our other consumer debt is tiny compaired to this.

                Thanks

                Thank You.
                I noticed you are in VA (I am as well). Did your lawyer submit the paperwork (file a motion) necessary for the strip in order for it to go from secured to unsecured prior to being confirmed? Here in VA, from what I'm to understand, the motion must be filed PRIOR to confirmation....

                FWIW, the 2nd should continue to show in your plan (but as unsecured) until you complete your Ch. 13; at that point upon sucessful completion, it will be stripped. However for that to occur, you need to have that motion filed requesting the strip (and subsequent court approval).

                Comment


                • #9
                  Hi Pandora,
                  Here in VA, from what I'm to understand, the motion must be filed PRIOR to confirmation....

                  Do you know where i can look that up in the bankruptcy code? I tried but couldn't find anything.

                  Surrendered my motorcycle today....luxury item. No one bought my, not if you drive a 97 Pontiac argument! But, it's true!

                  Comment


                  • #10
                    Originally posted by wobbly View Post
                    Hi Pandora,
                    Here in VA, from what I'm to understand, the motion must be filed PRIOR to confirmation....

                    Do you know where i can look that up in the bankruptcy code? I tried but couldn't find anything.
                    It's not in the bankruptcy code because this is something that varies by local court. It may be in the local rules in the district or division Pandora filed in. If you are not in the same district and division (if your district is divided into divisions), the rules may be different even though you are both in the same state. Check your court's website for local rules. But also check for general ordres and guidelines. My district requires that the lien strip be resolved before the plan is confirmed, but it isn't in the local rules. It's in the court's guidelines.
                    LadyInTheRed is in the black!
                    Filed Chap 13 April 2010. Discharged May 2015.
                    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                    Comment


                    • #11
                      Yea, Eastern District, Richmod VA....can't find it.

                      Comment


                      • #12
                        RULE 3015-2 CHAPTER 13 PLAN REQUIREMENTS
                        (A) Form of Plan; Inclusion of Related Motions: The only acceptable form for a chapter 13
                        plan shall be that form approved by the Court (Exhibit 1 to these Local Bankruptcy Rules) and
                        available from the Clerk upon request or from the court’s Internet web site,
                        www.vaeb.uscourts.gov. Counsel are encouraged, however, to delete the text of inapplicable
                        sections from the plan provided that the section numbering and section headings are retained,
                        followed by an appropriate notation such as “None” or “Not Applicable”. If applicable, and
                        without prejudice to a debtor’s right to file a stand-alone motion seeking the same relief, the plan
                        shall include the following related motions:
                        (1) Motion for Determination of Value Pursuant to 11 U.S.C. § 506(a).
                        (2) Motion for Lien Avoidance Pursuant to 11 U.S.C. § 522(f): (Lien avoidance
                        under any other provision of the Bankruptcy Code must be by separate adversary
                        proceeding and requires service of a summons and complaint.)
                        (3) Motion for Assumption or Rejection of Executory Contracts Pursuant to 11
                        U.S.C. § 365.
                        http://www.vaeb.uscourts.gov/files/Rules12_19_11.pdf
                        Last edited by LadyInTheRed; 05-25-2012, 12:06 PM.
                        LadyInTheRed is in the black!
                        Filed Chap 13 April 2010. Discharged May 2015.
                        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                        Comment


                        • #13
                          Thank You!

                          Now to decider it. I have to think the lawyer knows it's OK to file it separately.

                          Cheers!

                          Comment


                          • #14
                            Originally posted by wobbly View Post
                            Now to decider it. I have to think the lawyer knows it's OK to file it separately.
                            Yeah, the fact that it says you "shall" include motions in the plan but reserves the right to file them separately seems inconsistent. But, I don't see anything that says the motions have to be resolved before confirmation. So, there isn't anything to contradict your lawyer. But, I think I'd still ask him why it works better to wait.
                            LadyInTheRed is in the black!
                            Filed Chap 13 April 2010. Discharged May 2015.
                            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                            Comment

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